The EU General Court rejected gas pipelines Nord Stream AG and Nord Stream 2 AG’s challenges to EU Directive 2019/692 on Wednesday.

Federal Network Agency (Bundesnetzagentur) of Germany plans to ...

In May 2019 the EU passed Directive 2019/692, which requires that bundled gas pipelines owned by the same company running between member states (in this case Germany) and third countries (in this case Russia) must open up the pipelines for access by third parties. A Russian company, PJSC Gazprom, owns 51 percent of Nord Stream AG and wholly owns Nord Stream 2 AG. Nord Stream AG’s pipeline has been carrying gas from Vyborg, Russia, to Lubmin, Germany, since 2012. In 2017 Nord Stream 2 AG began construction on the Nord Stream 2 AG pipeline. The new pipeline bundles parallel to the Nord Stream AG pipeline.

The EU gave member states until February 2020 to incorporate Directive 2019/692 into national law. By this time, Nord Stream 2 AG had completed about 95 percent of the new pipeline. Nord Stream 2 AG had completely funded the new pipeline’s construction for its sole use. Nord Stream AG and Nord Stream 2 AG filed suit arguing that Directive 2019/692 be annulled, because the companies were discriminatorily targeted by the directive.

The court found that neither company was discriminated against, because other companies have faced similar issues under the new directive. The court additionally outlined an exception to the directive that member states can allow that would make the companies unaffected by the directive:

Regarding the national transposing measures which are intended, as from 24 February 2020, to make the obligations under Directive 2009/73, as amended, binding with regard to operators, the Member States have a margin of discretion. Moreover, according to the amending directive, the national regulatory authorities may, under certain conditions, decide to grant exemptions or derogations from certain provisions of Directive 2009/73, as amended, to major new gas infrastructure, on the one hand, and to gas transmission lines between the Member States and third countries completed before 23 May 2019, on the other. For the purposes of implementing those provisions, the national regulatory authorities have a wide discretion as regards the grant of such exemptions or derogations and any specific conditions to which those exemptions or derogations may be subject.

Nord Stream AG and Nord Stream 2 AG may appeal the General Court’s ruling within two months and ten days of the decision. Both companies may also seek the exemption from a German court that stays Directive 2016/692 enforcement.

Please see the press release